Forty-five tugboat workers could leave more than $100 million of iron ore exports stranded after threatening strike action within the next 30 days.

As Treasurer
Joe Hockey
prepares to deliver a federal budget that bears the pain associated with a cooling mining industry, deckhands aligned with the Maritime Union (MUA) declared they were prepared to stop shipping at Port Hedland to get better conditions.

They voted to approve the option of holding strikes of 24 hours, 48 hours and seven days in their dispute with American shipping company Teekay.

The strikes are not certain to occur, but the permission gained on Monday is only valid for 30 days, meaning strikes appear increasingly likely before the end of the financial year.

Port Hedland is the exit point for the majority of Australia’s iron ore, with
BHP Billiton
,
Fortescue Metals Group
and
Atlas Iron
set to be the most affected if a strike occurs.

West Australian premier
Colin Barnett
said a strike would damage WA’s reputation. Exports from the port generate about $7.5 million a day in royalty income for the state.

“Let’s be clear, we are not talking about low-paid workers here," he said.

“Port Hedland tugboat deckhands are already the highest-paid deckhands in Australia, and I understand they are seeking a substantial pay increase and additional leave entitlements. I don’t think that’s reasonable in this climate."

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He said he hoped Fair Work Australia could assist in resolving the dispute without the need to strike. The WA government is in talks with the federal government to consider “any avenues available to prevent disruption to this vital industry".

Power calls for shake-up

Fortescue could be particularly affected, with the miner already needing to run at “sprint capacity" in the June quarter to meet its full-year export forecast. Fortescue chief executive Nev Power said any exports lost through strike action could not be recovered, and he called for a shake-up of industrial relations laws.

“A tide lost to sailing iron ore shipments results in lost exports that cannot be retrieved," Mr Power said.

“There is a need to reform outdated industrial laws that allow a handful of workers to hold to ransom the jobs of thousands of people, threaten state revenue, jeopardise the sustainability of local communities and damage our international trade reputation.’’

Teekay is contracted by BHP Billiton to operate tugboats for all exporters within Port Hedland harbour, and a BHP spokeswoman said the company was disappointed by the strike vote.

“If the port operations are suspended, Australia’s iron ore exports are significantly impacted," she said. “We estimate this will cost suppliers who ship out of Port Hedland around $100 million a day.

“Significant royalty and tax revenue will be lost to the WA and federal governments. Mining companies like BHP Billiton are not able to make up lost volume of this nature, and governments cannot recover these lost royalties and taxes."

Deckhands seek better pay, leave

Rio Tinto
looms as the biggest winner from a strike, given that it exports from its own port at Cape Lambert, about 200 kilometres away.

The deckhands earn about $140,000 a year and want better pay and annual leave. They currently work four weeks on, four weeks off. MUA spokesman Will Tracey said it was reasonable to expect four weeks of annual leave.

“Industrial action is always a last resort and we still hope that we can come to an agreement without having to take the action which has been ­sanctioned by the Fair Work Commission," he said.

“We understand that Port Hedland is very important to the Australian economy and so we want to ensure that the best tug boat workers can be attracted to work at such a remote location."

Mr Power said the port contributed billions of dollars per year in revenue to the state and federal governments, while the jobs of thousands of people in the Pilbara were dependent on its efficient, reliable operation.

The threat of strikes on the Port Hedland tugboats is not confined to the deckhands, with two other classes of tugboat workers – engineers and masters – also inching toward strike action.

Two separate ballots of the engineers and masters are currently being conducted and may also approve strike action at some time over the next two months.

Australia is tipped to export $78.5 billion worth of iron ore this year, and the bulk commodity remains Australia’s most lucrative export commodity.